When a standard costing system is used with process costing, Work in Process
inventory is recorded using actual costs.
Allocating joint costs based upon a physical measure ignores the revenue-generating
ability of individual products.
In a mutually inclusive project situation, if one project is chosen, all related projects are
eliminated from further consideration.
The effect of capital expenditures on the master budget is reflected through periodic
depreciation charges in the cash outflow portion.
Performance measures must be quantitative to be useful.
Backflush costing requires fewer allocations than traditional accounting methods.
Ideal standards generally yield unfavorable variances.
Discrete production losses are assumed to occur at the end of a process.
Normal spoilage is considered a period cost.
The learning and growth perspective of the balanced scorecard focuses on using an
organization’s intellectual capital to adapt to or influence customer needs and
expectations.
Managerial accounting is most concerned with addressing the needs of the firm as a
whole.
Bottlenecks in a production process will cause other parts of the process to experience
idle time.
Spoilage occurring on specific jobs should be considered in computing predetermined
factory overhead rates.
The usage variance reflects the difference between the price paid for inputs and the
standard price for those inputs.
If production exceeds sales, absorption costing net income is less than variable costing
net income.
Ultimate Vision Corporation
Ultimate Vision Corporation has two product lines: LCD televisions and projection
televisions. The company has budgeted the following production and overhead costs for
the upcoming year:
Refer to Ultimate Vision Corporation. If the company uses an activity-based costing
(ABC) system to allocate factory overhead, the machine maintenance cost allocated to
projection TVs would be:
A. $ 72,000
B. $108,000
C. $110,769
D. $124,615
Which of the following statements about management or financial accounting is false?
A. Financial accounting must follow GAAP.
B. Management accounting is not subject to regulatory reporting standards.
C. Both management and financial accounting are subject to mandatory recordkeeping
requirements.
D. Management accounting should be flexible.
A basic concept of variable costing is that period costs should be currently expensed.
What is the rationale behind this procedure?
A. Period costs are uncontrollable and should not be charged to a specific product.
B. Period costs are generally immaterial in amount and the cost of assigning the
amounts to specific products would outweigh the benefits.
C. Allocation of period costs is arbitrary at best and could lead to erroneous decision by
management.
D. Because period costs will occur whether production occurs, it is improper to allocate
these costs to production and defer a current cost of doing business.
Winters Company uses a weighted average process costing system and started 36,000
units this month. Winters had 15,000 units that were 25 percent complete as to
conversion costs in beginning Work in Process Inventory and 6,000 units that were 35
percent complete as to conversion costs in ending Work in Process Inventory. What are
equivalent units for conversion costs?
A. 43,350
B. 47,100
C. 48,900
D. 51,000
Benchmarking allows a company to
A. identify its strengths and weaknesses.
B. imitate those ideas that are readily transferable.
C. improve on methods in use by others.
D. all of the above.
Grant Corporation
The following information is available for Grant Corporation for the current month:
All materials are added at the start of production and the inspection point is at the end
of the process.
Refer to Grant Corporation. What is cost per equivalent unit for conversion costs using
weighted average?
A. $4.19
B. $4.41
C. $4.55
D. $4.35
Grant Corporation
The following information is available for Grant Corporation for the current month:
All materials are added at the start of production and the inspection point is at the end
of the process.
Refer to Grant Corporation. What is the cost assigned to normal spoilage and how is it
classified using weighted average?
A. $6,193 allocated between WIP and Transferred Out
B. $6,424 allocated between WIP and Transferred Out
C. $6,193 assigned to loss account
D. $6,424 assigned to units Transferred Out
Eichholtz Company uses 10,000 units of a part in its production process. The costs to
make a part are: direct material, $12; direct labor, $25; variable overhead, $13; and
applied fixed overhead, $30. Eichholtz has received a quote of $55 from a potential
supplier for this part. If Eichholtz buys the part, 70 percent of the applied fixed
overhead would continue. Eichholtz Company would be better off by
A. $50,000 to manufacture the part.
B. $150,000 to buy the part.
C. $40,000 to buy the part.
D. $160,000 to manufacture the part.
In a standard cost system, Work in Process Inventory is ordinarily debited with
A. actual costs of material and labor and a predetermined overhead cost for overhead.
B. standard costs based on the level of input activity (such as direct labor hours
worked).
C. standard costs based on production output.
D. actual costs of material, labor, and overhead.
Phoenix Corporation
The records of Phoenix Corporation revealed the following data for the current year.
Refer to Phoenix Corporation. Assume, for this question only, actual overhead is
$98,700 and applied overhead is $93,250. Manufacturing overhead is:
A. overapplied by $12,900.
B. underapplied by $18,350.
C. overapplied by $5,450.
D. underapplied by $5,450.
Which of the following areas offers an opportunity to eliminate waste?
A. raw material and labor
B. space and production time
C. recordkeeping and working capital
D. all of the above
Robertson Company.
Robertson Company uses a job-order costing system and the following information is
available from its records. The company has three jobs in process: #8, #12, and #15.
Direct material was requisitioned as follows for each job respectively: 25 percent, 30
percent, and 30 percent; the balance of the requisitions was considered indirect. Direct
labor hours per job are 2,800; 3,300; and 4,000; respectively. Indirect labor is $45,000.
Other actual overhead costs totaled $50,000.
Refer to Robertson Company. What is the total amount of actual overhead?
A. $ 45,000
B. $ 95,000
C. $114,500
D. $119,938
Taylor Corporation
Taylor Corporation manufactures and sells baseball bats. For a recent period, its
production and sales objectives were each set at 20,000 units. Also, for this period the
firm had estimated costs as follows:
Refer to Taylor Corporation. For this question only, assume that Taylor Corporation
actually produced and sold 18,000 baseball bats. Taylor Corporation’s operations for the
period would (on an overall basis) be regarded as efficient if total costs were below
what amount?
The weighted average cost of an organization’s various sources of funds is referred to
as ______________________________.
The difference between actual and budgeted fixed factory overhead is referred to as a
__________________________________________________.
What are enterprise resource planning systems (ERPs)?
Underapplied factory overhead that is immaterial in amount is closed to
___________________________________ at year end.
Castle Corporation
The following questions are based on the following data pertaining to two types of
products manufactured by Castle Corporation:
Fixed costs total $300,000 annually. The expected mix in units is 60 percent for Product
Y and 40 percent for Product Z.
Refer to Castle Corporation. How much is Castle’s break-even point sales in units?
Discuss the four primary components of a control system.
Buxton Corporation produces lawn chairs. In order to produce the frames for the
furniture, special equipment must be set up. The setup cost per frame is $50. The cost
of carrying frames in inventory is $4 per frame per year. The company produces 10,000
lawn chairs per year.
1> Compute the number of frames that should be produced per setup in order to
minimize total setup and carrying costs.
2> Compute the total setup and carrying costs associated with the economic order
quantity?
In a(n) ____________________ cost system, factory overhead is assigned directly to
products and services.